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Speech
Unlocking Our Potential
The economy looks quite strong at present. GDP growth is solid, unemployment is low, payroll employment is growing quickly and inflation is firming toward the Fed’s 2 percent target.Underlying this growth has been strong consumer and business confidence. At the same time, consumers and businesses are concerned about the future.Growth is critical to the future, as it creates more room for rates to rise, improves fiscal health and creates better lives for people in need. Our growth potential may be low due to slow population and productivity growth. That creates challenges for monetary ...
Speech
Inflation Then and Now
Labor market conditions remain solid, while inflation remains somewhat elevated. It makes sense to stay modestly restrictive until we are more confident inflation is returning to our 2 percent target.I recognize the fight against inflation has been long. But it is critical that we remain steadfast.It is tempting to focus on gaming out short-term factors, but it’s hard to make significant monetary policy changes amidst such uncertainty. So, I prefer to wait and see how this uncertainty plays out and how the economy responds.
Speech
What Decade Are We In?
A little over a year ago, we shut down the U.S. economy to slow the spread of COVID-19. It was a painful, difficult process, and thankfully, we seem to be on the other side. But it turns out that reopening our economy isn’t easy either. Who would have thought that the same auto plants that went idle last March would once again be closed — this time because of a chip shortage? Who could have imagined flying somewhere but not being able to find a rental car when you land? And who would have expected hotels, restaurants and theme parks to be paring back their menus and hours just when ...
Journal Article
Business Short-Termism and Monetary Policy
President's Message: Business Short-Termism and Monetary Policy
Speech
Recession Revisited
This has been called the most predicted recession in memory. Forecasts keep getting pushed out. No one banished the business cycle, so those who keep predicting a recession will eventually be right. But most recessions come suddenly.Some fear that the Fed’s commitment to reining in inflation will be that shock to the economy. To be sure, the Fed’s objective is not to cause a recession; it’s to reduce inflation, in line with our mandate.There is still a plausible story that inflation normalizes in short order and the economy dodges additional trauma. Certainly, last month’s inflation ...
Journal Article
President's Message: How Do Small Towns Grow?
Following the Great Recession, the dominant narrative around rural communities has been one of population loss: opportunities are few, so kids leave small hometowns behind. No one moves in to replace them. And a sad but real demographic reality is that an older population means larger natural population losses, as well.
Speech
What’s Driving Inflation?
We are grappling with high, broad-based and persistent inflation. It is worth asking: what happened?It’s part COVID and supply imbalances. It’s part fiscal. And it’s part monetary. Movements in any of these factors could have quieted inflation somewhat. But I’m not convinced any one of them is the whole story. For me, it’s the accumulation of so many inflationary pressures at once that likely tells the tale.The question is how long this can last. Persistence is the essence of inflation. Business leaders still see it as an episode, not a regime change. The water in the river may be ...
Speech
Talking About Outcomes
In an era of low interest rates, forward guidance has become a crucial tool in the Fed’s toolbox.The Fed’s first forward guidance in the early 2000s was couched in general terms. During the Great Recession, the Fed introduced date-based forward guidance.While markets and reporters may prefer dates, tying monetary policy to the calendar in times of great uncertainty is asking for Fed credibility to be put on the line.The Fed now issues outcome-based forward guidance, making it clear that monetary policy is driven by economic conditions, not dates.Regarding the Fed’s asset purchases ...
Journal Article
The Supply Side of Rural Development
President's Message: The Supply Side of Rural Development
Speech
What’s Sidelining Workers?
This year, we’ve seen that shortages in labor supply can constrain economic growth. This might seem unique to the pandemic but as our workforce ages and birthrates decline, we could find workforce availability limiting our economic growth.There are nearly 108 million on the sidelines. Approximately 8 million are unemployed and roughly 100 million are out of the labor force.The pandemic has exacerbated four key barriers to employment: mismatches, family care, health and incentives.Overall, this is a math problem. Those on the sidelines won’t come back to the labor market unless the math ...